Altcoins – Great investment opportunity or a new bubble

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Alternative cryptocurrencies: a great investment opportunity or a new bubble?

The world of digital currencies is not only about bitcoin. In terms of capitalisation, the market share of this oldest cryptocurrency fell below 50% at the end of 2020 and the down trends goes on. In December 2020, bitcoin’s share of the total cryptocurrency market was 90%, while in the meantime many other cryptocurrencies came into existence closing the gap significantly.

These currencies known as altcoins („alternative cryptocurrencies“) are hailed by many investors. No wonder, the pace at which they emerge is dramatically accelerating. The total value of some selected altcoins as of 1 January 2020 was as follows:

  • Ethereum: USD 86 billion,
  • Ripple: USD 108 billion,
  • Litecoin: nearly USD 14 billion,
  • Monero: USD 6.1 billion.

Bitcoin Cash is a remarkable phenomenon as well. It emerged after splitting from Bitcoin (known as a hard fork) in August 2020 as a result of long-term disputes within the bitcoin community. Nowadays, its value is USD 41 billion, primarily owing to the entry to Coinbase. However, some voices point out to unfair manipulative practices with the value of the new crypto.

Miners and investors – another side of the coin

Similarly to bitcoin, most of altcoins get into the digital deposits through mining. Miners provide the blockchain system with computing capacity in order to carry out crypto transactions (transfer of cryptocurrency from one wallet to another). They get a reward in form of new units of the digital currencies.

To avoid devaluation, the final number of units is limited from the start (ethereum is an exception). The reward for the computing capacity declines exponentially and the mining process is more and more affected by the growing demands for hardware.

With the declining efficiency of the mining process the position of cryptocurrencies is still good enough to motivate miners to execute crypto transactions. The growing rewards for the processing of blockchain operations play also a role (e.g. each bitcoin transaction is charged a few cents or dollars).

Era of new cryptocurrencies

The second half of 2020 was the first golden age of digital currencies. The total value of all cryptocurrencies reached hundreds of billions US dollars. The same as real estate or gold, bitcoin has become a strong investment instrument.

In parallel, dozens of new cryptocurrencies are emerging. Right now, there are more than a thousand cryptocurrencies, of which only a handful is worth attention. Visionary ambitions are associated for instance with the OTN token. The „Open Trade Network“ concept aimed at interconnecting individual blockchain networks with yet non-existing cross-chain technology to make the exchange of cryptocurrencies simpler without having to rely on third parties.

The arrival of new altcoins is also accompanied by a new phenomenoninitial coin offerings. ICO means a prioritised offering of cryptocoins to some selected investors to enable further capitalisation. In the past, the phenomenon of ICO was the driving power for the rise of Ethereum’s price.

The principle of ICO is similar to the one used for the initial start-up investments during the first boom of online companies, giving birth to giants such as Google, eBay or Amazon now having colossal impact on their industries. The same ambitions are expected from the digital currencies.

Where to get altcoins

The easiest way to get new cryptos is mining. (The description of this process is beyond the scope of this article). A second option is to buy the cryptos at exchanges.

Don’t be shy! Go to reliable exchanges with a proven track of altcoin trading that are trusted by a large community and experts such as Coinbase or CoinMate.

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Think twice before you start. Fraud may occur in the currencies in circulation. Fraudulent issues of altcoins (known as „scamcoins“) haves stolen money from many investors. As an example of such as a Ponzi scheme I can name OneCoin. The promoter of the project – Onecoin Ltd. – put its own interests over those of the investors selling the crypto once the value reached a profitable level.

How to make money with altcoins

You can be a traditional user exchanging USD for cryptocurrency at a certain rate, just like when exchanging for other currencies for your holiday abroad.

Leave your altcoins in your wallet or at an exchange. Later on, once the value of your cryptocoins has increased, take the crypto and convert it back into your previous currency. Ideally, you will get a multiple of your initial investment. If you had retained all your money in bitcoins from 1 January 2020 to 31 December 2020, you would have earned around 1300 %, i.e. 13 times as much as you had at the beginning of the year.

On the other hand, you can use cryptocurrencies for speculating and earn money in the short run in the same way as on Forex. You can do this for example with IQ Option.

With the traditional way of holding cryptocurrencies, you cannot use leverage for trading. It might be better not to use it, because it might seem difficult to comprehend in the beginning. However, there is nothing that complicated about leverage trading as it may appear at first sight.

Leverage trading offers you to multiply your initial investment. If you have on your trading account, let’s say 10 000 USD and use a leverage of 1:10 you can open trades as if you had on the account 100 000 USD. Your earnings will potentially be ten times bigger. The bad news worth mentioning is that the same principle also applies to the opposite direction, when you lose.

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Author

More about the author Step

I’ve wanted to build a business of some kind and earn money since I was in middle school. I wasn’t very successful though until my senior year in highschool, when I finally started to think about doing online business. Nowadays I profitably trade binary options full-time and thus gladly share my experiences with you. More posts by this author

Best Small Cap Altcoins to Invest in for 2020

Although the 2020 bear market discouraged many investors from entering the crypto space, the current bull run is proving that cryptocurrency still has plenty of value and potential to offer those who seek quick profits.

If you persevered through the crypto winter and weren’t persuaded by the fickle bandwagon investors who sold off their crypto assets for fear that the bubble had burst, you may be in a good position to start investing in small cap altcoins again. With history typically repeating itself, there’s a good chance that we’ll see an altcoin resurrection close to what we experienced in 2020.

Sure, investing in small cap altcoins is a risky endeavor (if you don’t conduct your due diligence, you stand the risk of losing your investment), but taking a calculated risk can result in a huge payday.

If you look back at the early days of the internet, no one would have thought that companies like Google and Amazon would grow to become the largest tech companies to date.

Such is the case with certain small cap cryptocurrencies (on a much smaller scale that is) that have the potential for 25x or even 50x growth in value within the next few years. Most of these cryptocurrencies have innovative applications looking to solve real world problems.

In this article, I’ll be going over 7 of the best small cap altcoins to invest in for 2020.

Despite most of the relatively new projects in this list, the coins reviewed here either have experienced high adoption or have strong institutional backing. Although some of these projects may not have a final product yet, they have been able to keep up with their roadmaps through regular development updates and beta releases.

Now, let’s get into it.

Disclaimer: This article is NOT investment advice.

Elastos (ELA)

Elastos is creating “a new kind of Internet powered by blockchain technology.” Within this decentralized internet, users will be able to earn from their content. Film creators, article writers, and game creators all stand to benefit from this new World Wide Web.

Elastos is also a network-based operating system that uses blockchain technology to issue smart contracts, run DApps, and implement peer-to-peer storage as well as transfer of digital assets.

Why Should You Invest in Elastos?

In our fast paced tech world, innovation is key to the survival of any venture. Elastos is one of the most innovative blockchain projects out there. Rather than ignoring some of the vulnerabilities of the web (like what most blockchain projects do), Elastos has created a “smart internet” capable of removing all possible threats found within our current internet protocol. This allows the possibility of creating enterprise level DApps that can support millions of users while performing complex tasks.

On most decentralized platforms, transactions and DApps run on the same network, which often puts a strain on the main blockchain. Elastos has created a fast and secure network by splitting it’s blockchain into two. Transactions run on the main blockchain while DApps and smart contracts are executed on the side blockchain. No other cryptocurrency has achieved such a feat.

Elastos is also backed by many high-profile organizations, including the Chinese central government, Tsinghua University of China, and Foxconn. It also has a team of Rock star advisors and developers, which has helped to build the coin’s credibility.

At the time of writing, Elastos was priced at $3.70 or 0.00040378 BTC per coin, making it a fairly moderately priced investment in relation to low cap altcoins.

Skycoin (SKY)

Skycoin has built a platform that is giving control of the internet back to the people. When the current version of the internet was created, there were a few shortcomings including the lack of a native payment system, lack of privacy protection, and censorship provisions that allowed governments to restrict certain types of content.

Skycoin has solved these issues by creating a platform where every person has equal access to the internet.

With Skycoin, you don’t have to go through an ISP for internet connection. You can use SKY tokens to purchase access to the internet through the sky ecosystem.

If you’re living in a country with extreme government censorship, the Skycoin decentralized internet could be the perfect solution. The ecosystem isn’t controlled by any government or company, meaning your activity can’t be tracked, which guarantees you full privacy.

Why Should You Invest in Skycoin?

Skycoin is one of the most attractive blockchain projects to invest in currently. In the near future, access to internet services will be a basic human right. Skycoin is trying to promote this reality through its decentralized internet.

In places where internet access is still expensive, Skycoin will be a welcome innovation. The decentralized internet is also likely to find increased adoption in countries where there is rampant government censorship.

Another reason why Skycoin makes for a worthy investment is the fact that the project has created a decentralized software ecosystem. Launched in April 2020, the Skycoin ecosystem is made up of different projects including Skywallet, which is a safe and inexpensive hardware wallet that users can also use to exchange Skycoin for Bitcoin, Other projects on the ecosystem are Fiber, a platform that other companies can use to launch their blockchain projects, Skyminer, and Skywire.

Skycoin has also been around the crypto space since 2020, making it one of the oldest coins around. Its founders are some of the earliest Bitcoin and Ethereum contributors.

If you’re tired of blockchain platforms with big promises and no product to show, Skycoin is the project for you. Their technology is unmatched, a team of experienced blockchain veterans back them, and with a current price of $1.63 per coin (at the time of writing), this is an investment opportunity that you don’t want to miss.

One of the most common problems in the crypto industry is the lack of highly customizable blockchain solutions fit for enterprises, institutions, and end users. Luxcore has developed an industry agnostic decentralized solution that makes it easy for businesses and institutions to integrate blockchain ready features and products into their practices.

The industry agnostic blockchain ecosystem will help to reduce the high costs of decentralization as well as help to simplify some of the barriers to entry that enterprises, end users, and institutions face when looking to integrate blockchain technology.

Why Should You Invest in Luxcore?

Luxcore recently released their 2020 roadmap, and there’s a lot to be excited about. One of the most exciting features is the upcoming release of LuxGate, which is a “peer-to-peer cross blockchain platform.”

The interoperability platform set to be released as a beta version in late Q3 or early Q4 of the year will help to facilitate engagement between otherwise incompatible blockchain ecosystems. In simple terms, the platform will allow Zcash blockchain to interact with Monero or Ethereum.

Luxcore also boasts having the first and only PoS-Enabled Web Wallet. Using a static reward system, the wallet equalizes the stalking playing field by allowing all LUX holders who stake, to earn rewards regardless of their total holdings.

If you’re looking for an innovative staking wallet where you don’t have to worry about high energy costs, then Lux is for you. As a staker, you can earn even if your computer is off.,

Currently, no other web wallet performs the same functions as the Luxcore PoS-Enabled Web Wallet.

With a current price of $0.550117 per coin, investing into LUXCore may be one of those calculated gambles that pay off in the near future.

Dent (DENT)

Dent is a blockchain-powered marketplace where users can easily exchange mobile data. The company is looking to revolutionize the telecommunication industry through its innovative approach to data sharing where users can sell off their left-over data to someone else through an all-in-one app.

Through Dent, users will be able to earn from excess MBs. Heavy internet users can also extend their bandwidth by buying extra data bundles at affordable prices. As a token owner, you will also be able to bypass roaming charges.

Why Should You Invest in Dent?

Very few cryptocurrencies have as much real-world traction as Dent. Dent ranks second to BAT with a total of 2 million global users buying and selling mobile data through the network.

The network will mainly benefit people in developing countries where mobile data is costly. The high applicability and adoption of the Dent network in less developed countries will promote an increase in the value of DENT.

Dent has also partnered with major telecommunication companies across the world, which helps to boost the company’s credibility and user base. These companies include

  • India: Airtel
  • USA: AT&T, Verizon
  • Brazil: Vivo, Claro
  • Mexico: America Movil, Telefonica
  • Kenya: Safaricom, Airtel

Dent is also regularly updated with the most recent upgrades being the implementation of a mobile application for both Android and IOS users. This upgrade will promote increased adoption of the app.

Despite being one of the lowest priced cryptocurrencies, Dent is a worthy investment to jump on. Although the massive supply of the coin is a cause for concern, the usefulness of their technology far outweighs such worries.

Enjin Coin (ENJ)

Enjin coin is a blockchain-powered virtual goods platform meant to be used in the online gaming industry. Enjin Coin was created by Enjin, which is the world largest online gaming community platform.

One of the biggest problems with the current virtual items market place is the lack of trust, which arises from instances of users not receiving their purchased goods. By leveraging the immutability of the decentralized ledger technology, Enjin coin has solved this problem.

Using the decentralized platform, developers and gamers can safely trade virtual items and in-game currencies. Enjin Coin also acts as a crowdsourcing platform where developers can sell in-game items to fund ongoing projects.

Why Should You Invest in ENJ?

Online gaming is big business and is bound to continue growing, especially with the recent explosion of mobile games. Enjin coin is looking to capitalize on this growing industry by being the first project to integrate cryptocurrencies and gaming.

Enjin is also the only coin that brings about real world ownership of in-game currencies and virtual items, which has allowed gamers to earn from their hobbies; therefore, increasing its user base.

Another reason to buy ENJ coin is the fact that the coin is part of the Enjin network, which is the largest gaming community platform. With such a huge backing, Enjin coin is highly poised to exponentially grow in value.

With a network of over 20 million players, ENJ is currently the biggest gaming coin and is bound to continue growing as more users and games move to the blockchain.

Relex (RLX)

Relex is the world first cryptocurrency-based real estate crowdfunding platform. Users can use the RLX token to buy property or to invest in development projects during the construction phase, which creates opportunities for passive income after the developer starts to distribute profits.

Real estate companies will, in turn, benefit from faster funding as well as a diverse funding pool where no individual investor has an undisputed advantage.

Why Should You Invest in Relex?

Blockchain is poised to revolutionize the real estate industry, and by being among the first cryptocurrencies to find a practical application in real estate, Relex has a great opportunity to be a real market shaker. As an early investor, you stand the chance of enjoying massive returns with this low altcoin.

Unlike some cryptocurrency projects which are all talk and no action, Relex has a working product. The Relex platform has been used to fund development projects in Vietnam.

Relex is also pioneering the nanocoining concept, which is a crowdfunding alternative that allows even average investors to invest in high value, high yield projects that would otherwise be beyond their reach. Through nanocoins, Relex will be able to attract more users which is likely to increase the value of RLX

Beam (BEAM)

Beam is a privacy-based cryptocurrency built on the Mimblewimble platform. Mimblewimble is a new blockchain built to allow scalability and increased transaction speeds without compromising privacy. Beam users have full control over their data privacy at zero expense to the performance of the blockchain

Why Should You Invest in Beam?

Unlike other privacy coins which run on the traditional blockchain, Beam is a new age coin and has more chances of scalability and improved transaction speeds. Despite being new to the market, Beam has the potential of competing with other well-established privacy coins such as Monero.

Beam also has various products, both existing and in development. According to the Beam road map, the company is set to release various updates during the year with a major one being expected later in June.

Beam has also received backing from large institutional investors, including Recruit, which is Japan’s version of LinkedIn. Interest from institutional investors signals better days ahead for Beam.

Final Thoughts

Starting the race first doesn’t mean you’ll finish first. Yahoo is a classic example of this in which an internet company that was first to the market with their search engine results, later faded away after more innovative companies started to enter their space (Google). The same may happen with the mentioned low cap altcoins above. However other cryptocurrencies with more innovative uses may surpass mid and high cap coins in the near future. We’re still in the Wild Wild West of the cryptocurrency space at the moment, so anything can happen.

Remember, don’t be a degenerate gambler and invest blindly into these small cap altcoins (or any cryptocurrency for that matter). If you conduct extensive research on a coin and make a sound investment decision based on data and not emotions, your calculated risk will most likely earn you a sizable reward for doing so.

If you have any comments or other coins you think should be added to the list, please comment below.

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How to Find Your Next Cryptocurrency Investment

The advent of Bitcoin and its stellar rise over the last few years has investors pouring their money into cryptocurrencies by the millions. Cryptocurrencies and blockchain projects achieved impressive returns, as well as dramatic declines.

Now, others who seek to emulate the returns of their peers are looking for the next big thing in the market. There are currently hundreds of alternate cryptocurrencies, referred to as “altcoins.” Often the newest ICO, or initial coin offering, represents an opportunity to multiply one’s investment , but they are also highly risky. However, it’s hard to predict which coins will receive the most attention and why. With the right recipe, a cryptocurrency can achieve sustainable growth and keep it once the bubble pops.

Find the ICOs

The first step is to figure out which initial coin offerings are coming up. With sites like ICOalert, developers have a place to list their upcoming pre-sale and public sale. They can also list other information like the soft cap, buy-in price and team profile. Savvy investors can use sites like these to plan their entry, do research, and have their money ready to invest in the best events.

The popularity of ICOs is shooting through the roof with data supporting the hype.

“ICO Alert has seen our amount of unique daily users double every 2 to 4 weeks. The growth is incredible, and validates our view that the community wants an unfiltered list of ICOs. ICO Alert remains the only free-to-list ICO website and the only comprehensive list of active and upcoming ICOs, so we expect the growth to continue,” said Robert Finch, the founder of ICOAlert.

Evaluate the Opportunity

While the rare ICO captures the attention of investors and raises the cryptocurrency it requires, many will inevitably fail,. Studying the market is not complicated and gives one a good idea of how the coin will fare.

How unique is the idea?

There are millions of ways to use blockchain, and new ideas are cropping up every day. Currently, the market is not impressed with coins that simply recreate the “decentralized currency” model, nor should they be. Bitcoin was a revolutionary idea when it was first invented, but now all cryptocurrencies share its functionality. Look for something that puts a new spin on an old concept or seeks to accomplish something ambitious. If you see obscure or regurgitated language on the project’s website, stay away because it might be a scam.

Distribution of the currency

The smart contract that manages the coin’s distribution has specific rules, like how much will be made available, to whom, when, and whether unsold coins will be “burned” (destroyed) or not. Typically, the scarcer a coin is in relation to its supply, the more it will fetch on the open market. Look for information on how many coins will be sold in the closed pre-sale (and what the bonus is for buying at that time), the ICO time window, and more.

Exchange plans

The most bullish thing for any cryptocurrency is to be listed on an exchange. If a place like Coinbase, Bittrex or Kraken announces plans to list a coin that is still in its ICO phase, this is an excellent sign.

Which blockchain is it built on?

New ICOs must be launched from an existing blockchain, unless they plan on building their own. The chain that the coin is built on determines which existing cryptocurrency one will use to participate in the ICO. A project using Ethereum’s blockchain will require Ether to purchase the new coin. Thus, at first it will be exchangeable only with Ethereum and no other cryptocurrencies. If it uses an obscure chain such as NEO, this could put a cap on price.

Who is on the team?

Look at the team’s composition for expertise and experience in the industry. Every real project will publish a short profile of each member, their history and individual role. A big team full of veterans is favorable.

All about the assets

The white paper is by far the most important determinant of a project’s seriousness. It should be comprehensive, thorough, and explain the technology and purpose of the coin well. Other assets can include videos, blog posts and other contributions from the team.

Check the community

Lastly, the community is a crucial indicator of a cryptocurrency’s potential. Cryptocoins have followings that gather online on websites like Reddit and Bitcoin.org. Github is a great resource as well, and those who can read code can see get a glimpse of how well the project is programmed. Social media is less important, but can also be useful. The hype that a coin receives has a close relationship with its eventual price, because those talking about it are usually investors themselves. Beware of bounties however, a practice that crypto startups use to reward those who spread the good word. Form your own opinion and always take another’s with a grain of salt. (See also: Here’s What’s Next for the Bitcoin Bubble)

Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual’s situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. This article was first published on September 7, 2020, as of that date the author owned cryptocurrency.

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